1. The Crime of Money Laundering and Criminal Enforcement

1.1 What is the legal authority to prosecute money laundering at national level?

The Public Prosecutor’s Office is the legal authority responsible for investigating and prosecuting individuals that are accused of committing money laundering. Within the Public Prosecutor’s Office, there is a specialised team of prosecutors focused on money laundering crimes.

Additionally, the Financial Intelligence Unit (FIU), which is part of the Superintendence of Banking and Insurance (SBS, in Spanish), is the legal authority entitled to receive and analyse financial information in order to determine if there are suspicious activities related to money laundering and if this is the case, to inform to the Public Prosecutor’s Office about its findings.

1.2 What must be proven by the government to establish money laundering as a criminal offence? What money laundering predicate offences are included? Is tax evasion a predicate offence for money laundering?

Money laundering is a criminal offence regulated in the Legislative Decree N° 1106. There are three modalities of money laundering:

When a person converts or transfers money, goods, effects or profits that he knows or should have presumed that they had illicit origins, with the purpose to evade the identification of such illicit origin.

When a person acquires, utilises, possesses, stores, manages, receives, hides or keeps with him money, goods, effects or profits that he knows or should have presumed they had illicit origins.

When a person transports or moves cash or bears financial instruments by any means within the national territory, that he knows or should have presumed that they had illicit origins, with the purpose of avoiding the identification of their origin, their seizure or confiscation; or when a person enters or leaves the country with those goods or just brings or sends those goods by any means, that he knows, or should have presumed that they had illicit origins, with the same purpose above-mentioned.

The money laundering predicates offences included are illegal mining, illicit drug trafficking, terrorism, financing of terrorism, crimes against public administration, kidnapping, procuring, human trafficking, illicit arms trafficking, smuggling of migrants, tax crimes, extortion, robbery, customs offences or any other crime that could generate illicit profits. It is important to note that it is not required to have a conviction on the predicate offence in order to prosecute an individual for money laundering.

Considering the above-mentioned, tax evasion is considered a predicate offence for money laundering.

Finally, is it important to highlight that what must be proven by the prosecutors is that the individual accused of committing money laundering must had known or should have presumed the illicit origin of the assets.

1.3 Is there extraterritorial jurisdiction for the crime of money laundering? Is money laundering of the proceeds of foreign crimes punishable?

No. Peruvian law applies only to crimes committed within Peru. Nevertheless, it is possible to investigate money laundering if the predicate offence took place abroad.

1.4 Which government authorities are responsible for investigating and prosecuting money laundering criminal offences?

The Public Prosecutor’s Office is the authority responsible for the investigation and prosecution of money laundering crimes. The Financial Intelligence Unit (FIU) is entitled to investigate and analyse financial information in order to determine if there are suspicious activities related to money laundering.

1.5 Is there corporate criminal liability or only liability for natural persons?

The Law N° 30424 regulates corporate liability for various criminal offences, including for money laundering crimes.

1.6 What are the maximum penalties applicable to individuals and legal entities convicted of money laundering?

Individuals: In the case of aggravating circumstances, money laundering is punishable by a term of imprisonment of between 10 to 20 years, but if the money laundering has its origins from illegal mining, illicit drug trafficking, terrorism, kidnapping, extortion or human trafficking, the term of imprisonment can be up to 25 years. Additionally, a fine is imposed on the individual convicted of money laundering, the amount of the fine varies depending on the individual’s wealth.

Legal entities: Money laundering is punishable with a fine that varies depending on the legal entity’s income or with another administrative measure. In this sense, if the legal entity’s annual income at the time of committing the crime was higher than 1700 UIT (i.e. for 2019, S/. 7 140,000), then the fine could be between 500 UIT (i.e. for 2019, S/. 2 100 000) and 10,000 UIT (i.e. for 2019, S/. 42,000,000). On the other hand, money laundering can also be punished with an administrative measure other than fines; in this case, the maximum penalty can be the dissolution of the legal entity.

1.7 What is the statute of limitations for money laundering crimes?

The statute of limitations is equal to the maximum penalty of the imputed crime. In other words, for simple modalities of money laundering, the statute of limitations would be 15 years, for aggravated circumstances it would be 20 years and if money laundering has its origins from illegal mining, illicit drug trafficking, terrorism, kidnapping, extortion or human trafficking it would be 25 years.

Furthermore, there is an extraordinary statute of limitations, which is equal to the maximum penalty plus its half; this statute of limitations applies since the beginning of the investigations.

1.8 Is enforcement only at national level? Are there parallel state or provincial criminal offences?

Yes. Enforcement is only at national level.

1.9 Are there related forfeiture/confiscation authorities? What property is subject to confiscation? Under what circumstances can there be confiscation against funds or property if there has been no criminal conviction, i.e., non-criminal confiscation or civil forfeiture?

The Financial Intelligence Unit (FIU) is entitled to order the freezing of assets of those individuals or legal entities that are presumed to be involved in money laundering crimes. The asset freezing order is an exceptional precautionary measure used to forbid the withdrawal, transfer, use, conversion, disposition or movement of funds or other assets of those individuals or legal entities related to money laundering crimes. This measure must be validated or revoked by the judge within a period of 24 hours.

On the other hand, during a criminal procedure, the judge can order a seizure of the goods belonged to the individual that has being accused by the prosecutor. Additionally, there are other procedures (not criminal procedures) which are intended to declare the government as the new owner of goods or assets that have illicit origins.

1.10 Have banks or other regulated financial institutions or their directors, officers or employees been convicted of money laundering?

Until now, no banks nor financial institutions nor their directors, officers or employees have been convicted of money laundering.

1.11 How are criminal actions resolved or settled if not through the judicial process? Are records of the fact and terms of such settlements public?

There is an option for individuals who are being investigated or have been condemned for money laundering crimes to reach an agreement with the Public Prosecutor’s Office in order to become a special witness or collaborator that will give information related to the crime in exchange for a reduction of the penalty. The records of the fact and terms of such settlements are not public until they are approved by the judge through a sentence.

2.1 What are the legal or administrative authorities for imposing anti-money laundering requirements on financial institutions and other businesses? Please provide the details of such anti-money laundering requirements.

Anti-money laundering and counter-terrorism financing (AML/CTF) requirements are imposed on financial institutions and other designated businesses by the Financial Intelligence Unit (FIU), following the GAFILAT principles. The most important of such requirements are the following:

to undertake measures to get to know the beneficial owners of an operation, to the extent permitted by due diligence;

to elaborate bylaws with obligations and measures on AML/CTF that employees must comply;

to appoint a compliance officer;

to train employees on AML/CTF topics;

to undertake a money laundering and terrorism financing risk assessment and monitor such risk on an ongoing basis;

to take into account the indicators that flag the likelihood of a money laundering or terrorism financing operation in order for the compliance officer to evaluate such operation and, if it is the case, qualify it as a suspicious operation and communicate this to the Financial Intelligence Unit (FIU);

to maintain a record of certain operations in which the amount of money involved equals or exceeds a threshold determined by the law or, in some cases, by bylaws; and

to keep copies of documents related to AML/CTF, including customers’ and employees’ identification documents, for at least 10 years after performing the operations in the case of financial entities and five years in the case of other businesses.

2.2 Are there any anti-money laundering requirements imposed by self-regulatory organisations or professional associations?

No. Anti-money laundering requirements imposed to the financial industry only come from the competent authorities.

2.3 Are self-regulatory organisations or professional associations responsible for anti-money laundering compliance and enforcement against their members?

Compliance and enforcement actions against designated professionals come only from the competent authorities, that is, mainly, the FIU.

2.4 Are there requirements only at national level?

Regulations on anti-money laundering are enforceable throughout the Peruvian territory and therefore the legal requirements regarding anti-money laundering policy are applicable at national level. Nevertheless, the regulations regarding anti-money laundering take into consideration, especially for the assessment of risks, the places where the operations are performed. For instance, if certain enterprises that should comply with AML/CFT regulations operates or offers its services or products in a place where there is a high rate of money laundering or other similar crimes, then it must apply stricter measures than other enterprises that operate in places where the crime rate is much lower.

2.5 Which government agencies/competent authorities are responsible for examination for compliance and enforcement of anti-money laundering requirements? If so, are the criteria for examination publicly available?

For financial entities, the SBS is the authority in charge of examining and enforcing the anti-money requirements. For other companies that do not have a specific supervisor, the authority in charge is the FIU. If a fine or sanction is applied, the criteria for examination would be publicly available. The FIU’s investigations are confidential but the motivation behind a sanction can be checked on the official site of the FIU.

2.6 Is there a government Financial Intelligence Unit (“FIU”) responsible for analysing information reported by financial institutions and businesses subject to anti-money laundering requirements?

Yes. The FIU is the competent authority that analyses the information about suspicious clients, workers or suppliers that the financial institutions and other businesses subject to anti-money laundering requirements have to report.

2.7 What is the applicable statute of limitations for competent authorities to bring enforcement actions?

The statute of limitations is four (4) years from the date on which the infraction is committed or since it ceased in the case of a continuous infraction.

2.8 What are the maximum penalties for failure to comply with the regulatory/administrative anti-money laundering requirements and what failures are subject to the penalty provisions?

In the case of financial entities, failure to comply with anti-money laundering requirements can be fined with a maximum penalty of 200 UIT (i.e. for 2019, S/. 840,000 or US$ 250,000 approximately). Nevertheless, the administrative authority can apply other types of sanctions, for example, order the company dissolution.

Also, in the case of individuals that are subject to financial regulation (e.g. brokers), failure to comply with anti-money laundering requirements can be fined with a maximum penalty of 100 UIT (i.e. for 2019, S/. 420,000 or US$ 125,400 approximately). Nevertheless, the administrative authority can apply other types of sanctions, for example, cancel the authorisation to operate.

On the other hand, in the case of businesses subject to anti-money laundering requirements, failure to comply with such requirements can be fined with a maximum penalty of 100 UIT (i.e. for 2019, S/. 420,000 or US$ 125,400 approximately). In the case of individuals, failure to comply with anti-money laundering requirements can be fined with a maximum penalty of 15 UIT (i.e. for 2019, S/. 63,000 or US$ 18,805).

In the case of financial entities and individuals subject to financial regulation, the above-mentioned penalties can be applied when they fail to inform the FIU about suspicious operations and when they violate the duty of confidentiality.

In the case of other businesses subject to anti-money laundering requirements, violation of the duty of confidentiality can be fined with the above-mentioned penalties.

2.9 What other types of sanction can be imposed on individuals and legal entities besides monetary fines and penalties?

Other sanctions are only applied to financial entities and individuals subject to financial regulation, but not to businesses that are only subject to anti-money laundering requirements.

The other sanctions that can be applied are:

Suspension of operating authorisation.

Temporary suspension of the inscription in the record managed by the Superintendence of Banking and Insurance (SBS, in Spanish), for a period greater than six and up to 12 months.

Suspension of the director, manager or any other responsible worker for a period not less than eleven (11) or more than twenty (20) days.

Cancellation of operating authorisation.

Exclusion of the inscription in the record managed by the SBS.

Removal of the director, manager or any other responsible worker, being prevented from re-occupying one of those charges for a period of ten (10) years.

Disqualification of the director, manager or any other responsible worker for a period of not more than five (5) years.

Permanent disqualification of the director, manager or any other responsible worker.

Intervention by the SBS.

Dissolution and liquidation.

2.10 Are the penalties only administrative/civil? Are violations of anti-money laundering obligations also subject to criminal sanctions?

No. Violations of anti-money laundering obligations or requirements are not subject to criminal sanctions. A case for criminal sanction arises when the elements stated in question 1.2 appear.

2.11 What is the process for assessment and collection of sanctions and appeal of administrative decisions? a) Are all resolutions of penalty actions by competent authorities public? b) Have financial institutions challenged penalty assessments in judicial or administrative proceedings?

Any administrative decision can be appealed at the administrative authority, after which it can be challenged in judicial proceedings. Every process is confidential but the final decision regarding the administrative sanctions is public. Financial institutions are not prone to challenge SBS sanctions in judicial proceedings.

3.1 What financial institutions and other businesses are subject to anti-money laundering requirements? Describe which professional activities are subject to such requirements and the obligations of the financial institutions and other businesses.

The Law 29038 determines the legal entities and individuals that are subject to anti-money laundering requirements (“obliged subjects”):

All financial and insurance institutions regulated by the Law 26702 (General Law of the Financial and Insurance Systems) and insurance brokers.

The companies that distribute, transport and/or commercialise chemical inputs that can be used in illegal mining, under control and supervision of the Peruvian Tax Authority.

Those who are mainly active in the commercialisation of certain machinery and equipment specified in the National Tariff classification.

Those who are mainly active in purchase and selling or importation of weapons and ammunition.

Those who are mainly active in the manufacturing and/or commercialisation of explosive materials.

Those who are mainly active in crowdlending through virtual platforms.

Lawyers and public registered accountants that act independently or the law firm or accounting firm that act on behalf or in the interest of their clients with the purpose of (i) performing the purchase and sell of real estate, (ii) managing money and other movable assets, (iii) organising the funding of legal entities, (iv) creating, reorganising or managing legal entities, and (v) performing the purchase or sell of shares.

Non-profit organisations that raise, transfer and disburse funds, resources or other assets for charitable, religious, cultural, educational, scientific, artistic, social, recreational or solidarity purposes or for the realisation of other types of actions or altruistic or charitable works, when they give credits, microcredits or similar.

The legal entities and individuals that are within the classification above-mentioned, must comply with all the general requirements of anti-money laundering as stated in question 2.1. Nevertheless, the following legal entities and individuals are just obliged to (i) appoint a compliance officer, and (ii) to communicate to the FIU any suspicious operation:

Those who are mainly active in the commercialisation of antiques.

Non-profit organisations that raise, transfer and disburse funds, resources or other assets for charitable, religious, cultural, educational, scientific, artistic, social, recreational or solidarity purposes or for the realisation of other types of actions or altruistic or charitable works, when they do not give credits, microcredits or similar.

Registered lobbyists.

Public auctioneers.

Credit and/or debit card processors.

Travel and tourism agencies and lodging establishments.

State-owned enterprises other than the ones indicated in the classification above-mentioned, the National Jury of Elections, the National Office of Electoral Processes, the Supervising Agency of the Government Procurement, regional governments and provincial municipalities.

Peru Compras (public entity, part of the Ministry of Economy and Finance, whose purpose is to optimise public procurement at national level).

Professional football clubs of the first and second division.

3.2 To what extent have anti-money laundering requirements been applied to the cryptocurrency industry?

There is no regulation on the cryptocurrency industry, meaning that companies and individuals that operate with cryptocurrencies (e.g. cryptocurrencies exchanges) are not subject to special requirements, for example, anti-money laundering requirements.

3.3 Are certain financial institutions or designated businesses required to maintain compliance programmes? What are the required elements of the programmes?

The Compliance Officers of the financial entities and individuals regulated by the Resolution SBS N° 2660-2015 must elaborate and maintain an annual compliance programme with the methodology for the execution of anti-money laundering-related activities, the dates of execution and the people in charge of each activity.

3.4 What are the requirements for recordkeeping or reporting large currency transactions? When must reports be filed and at what thresholds?

Obliged subjects must record certain transactions and operations in which the amount of money involved exceeds the threshold determined by the regulation. The thresholds vary depending on the type of operation (e.g. lending, currency exchange, etc.) and the type of obliged subject (e.g. financial institutions or other businesses). These records must be filed and kept by the obliged subject, available for the competent authorities.

3.5 Are there any requirements to report routinely transactions other than large cash transactions? If so, please describe the types of transactions, where reports should be filed and at what thresholds, and any exceptions.

No. There are no requirements other than the recordkeeping of large currency transactions.

3.6 Are there cross-border transactions reporting requirements? Who is subject to the requirements and what must be reported under what circumstances?

Yes. Reporting requirements apply to the obliged subjects listed in question 3.1 in spite of the origin of the transaction. If it is a cross-border transaction in which the obliged subject is part of and it exceeds the applicable threshold, it must be reported to the competent authority.

3.7 Describe the customer identification and due diligence requirements for financial institutions and other businesses subject to the anti-money laundering requirements. Are there any special or enhanced due diligence requirements for certain types of customers?

Both financial institutions and other businesses subject to anti-money laundering requirements must fulfil three phases of KYC measures:

(i) Identification phase – consists of developing and implementing procedures to obtain the information that allows to determine the identity of a customer or final beneficial owners.

(ii) Verification phase – involves the application of verification procedures at the beginning of the contractual relationship with respect to the information provided by customers and, if so, of its final beneficial owner, in order to ensure that they have been duly identified. If needed, this procedure can be done after the contractual relationship has begun.

(iii) Monitoring phase – intended to ensure that the operations performed by the customers are compatible with what is established in their profile. Also, the monitoring allows to reinforce and reaffirm the knowledge that the companies have about their customers, as well as to obtain more information when they have doubts about the accuracy of the data provided by the customers.

The information that they must obtain from their customers in the identification phase are the following:

Individuals:

Names and surnames.

Type of identity document and its number.

Nationality and residence.

Home address.

Telephone number and e-mail address.

Purpose of the operation to be performed.

Occupation and profession.

Indicate if the customer is a Politically Exposed Person (PEP) or has been a PEP, and information related to it.

Information about the beneficial owner of the operation.

Legal entities:

Corporate name.

Taxpayer Identification Number.

Legal entity main activity.

Identification of the shareholders that have directly or indirectly more than 25% of the share in the legal entity.

Purpose of the operation to be performed.

Identification of the legal representative.

Address and phone number of the main office.

In case the customer uses cash, origin of the money involved.

Moreover, in the following cases, the obliged subjects must carry out reinforced KYC measures:

Customers that are non-resident.

Legal entities with no address in the Peruvian territory.

Trusts.

PEP or a customer that is relative of a PEP or legal entities that have among its shareholders a PEP with equal or more of 25% of the share capital.

Customers that are being investigated for money laundering or financing of terrorism or predicate offences. Also applies for customers that have any kind of link with people or legal entities that are being investigated for the mentioned crimes.

Additionally, in the specific cases of financial institutions and individuals regulated by the Resolution SBS N° 2660-2015, they also must carry out reinforced KYC measures in the following cases:

Non-profit organisations, like those entities or legal structures that are mainly engaged in the collection and disbursement of funds for charitable, religious, cultural, educational, social or fraternal purposes or for the realisation of another type of charities or non-profit works.

Legal entities or individuals that receive transfers of funds from countries that are not cooperating with the Financial Action Task Force (FATF), or that are considered with money laundering and financing of terrorism risks, or with poor banking supervision or countries sanctioned by the Office of Foreign Assets Control – OFAC.

Dedicated to correspondent services with foreign companies established in countries of low or no taxation, as indicated by the tax authority, or that do not have banking regulation or supervision.

Finally, the reinforced KYC measures that the obliged subjects must apply are the following:

In the case of PEP, the names of its relatives until the second degree of consanguinity and second of affinity is required, and of the spouse or cohabitant, as well as the relation with legal entities where it maintains a share percentage equal or more than 25% of its share capital, contribution or participation.

Increase the frequency in the review of the customer’s transactional activity.

Conduct inquiries and apply additional measures of identification and verification, such as: obtaining information about the main suppliers and clients; collecting information from public or open sources; and making home visits.

To take a decision on beginning or maintaining the relation with the customer. This decision must be taken by the most important manager in the organisation or by another manager or committee designated.

Additionally, in the specific cases of financial institutions and individuals regulated by the Resolution SBS N° 2660-2015, they must also increase the frequency in the update of the information of the customer and, if it is a legal entity, an annual updating of their shareholders, partners, associates or equivalent title, which have directly or indirectly more than 25% of their share capital, contribution or participation.

3.8 Are financial institution accounts for foreign shell banks (banks with no physical presence in the countries where they are licensed and no effective supervision) prohibited? Which types of financial institutions are subject to the prohibition?

In Peru, financial entities are prohibited to operate with shell banks. Moreover, they must verify that their international counterparts do not operate with shell banks.

3.9 What is the criteria for reporting suspicious activity?

There is no established criteria for identifying and reporting suspicious activities; the criteria used depends on the evaluation of the Compliance Officer. Nevertheless, the term “suspicious activities” is defined by the norms that regulates anti-money laundering as “Operations carried out or which have been attempted, whose amount or features have no relation to the economic activity of the client or that do not have economic basis; or which by their number, quantities transacted or the particular characteristics of these, may lead reasonably to suspect that the obliged subject is being used to transfer, manage, exploit or invest resources from criminal activities or intended to its funding”. Moreover, the norms contain lists of examples of unusual and suspicious activities that facilitates the evaluation of the Compliance Officer.

3.10 Does the government maintain current and adequate information about legal entities and their management and ownership, i.e., corporate registries to assist financial institutions with their anti-money laundering customer due diligence responsibilities, including obtaining current beneficial ownership information about legal entity customers?

Yes. Firstly, there is a public registry of the Superintendence of Public Registries that maintains information about all legal entities and its shareholders, directors and managers.

Secondly, in the case of financial institutions, the SBS maintains current and adequate information about legal entities and their management and ownership. Moreover, the Financial Intelligence Unit (FIU) also maintains information regarding ownership and management, and other information relevant for anti-money laundering, of the obliged subjects, which includes financial institutions and other businesses. The obliged subjects, depending on if it is a financial institution or other business, have to periodically (quarterly, biannually or annually) report to the FIU about this information.

3.11 Is it a requirement that accurate information about originators and beneficiaries be included in payment orders for a funds transfer? Should such information also be included in payment instructions to other financial institutions?

Yes, as outlined in question 3.6; this also applies for national transactions.

3.12 Is ownership of legal entities in the form of bearer shares permitted?

Yes. The Resolution SBS N° 789-2018 and the Resolution SBS N° 369-2018 regulate the anti-money laundering requirements for non-financial businesses. The types of businesses subject to anti-money laundering regulation and the requirements have been outlined in questions 3.1 and 2.1. In general terms, non-financial institutions businesses must comply with less anti-money laundering requirements than financial institutions.

3.14 Are there anti-money laundering requirements applicable to certain business sectors, such as persons engaged in international trade or persons in certain geographic areas such as free trade zones?

Yes. The obliged subjects are listed in question 3.1 and they are required to comply with Law 29038 and its rules.

4. General

4.1 If not outlined above, what additional anti-money laundering measures are proposed or under consideration?

Recently, in 2018, the Congress of Peru enacted the Legislative Decree N° 1372 that imposes obligations on legal entities to identify and report the personal data of their beneficial owners (i.e. the people who effectively control the legal entity according to various criteria, for example, if he owns at least 10% of the share capital). They have to fill out an affidavit with the information mentioned and give it to the tax authority. These measures have been implemented in accordance with the FATF recommendations on tax evasion and anti-money laundering and combatting the financing of terrorism.

Additionally, the government of Peru enacted the “National Policy against money laundering and the financing of terrorism” in 2017. This national policy is the result of coordinated work between public entities and private companies, which outlines principles, guidelines, objectives and standards for the improvement in the application of measures on anti-money laundering and combatting the financing of terrorism.

4.2 Are there any significant ways in which the anti-money laundering regime of your country fails to meet the recommendations of the Financial Action Task Force (“FATF”)? What are the impediments to compliance?

The last assessment report published by the Financial Action Task Force on Latin America (GAFILAT) in 2008 within the scope of the “III round of Mutual Evaluations” gave Peru the qualification of “Partially Compliance”, given that out of the 49 Recommendations (including the 9 Special Recommendations) published in 2003, 10 were compliant, 14 largely compliant, 24 partially compliant and just one non-compliant; the results of this evaluation led to an enhanced follow-up. Since then, the government of Peru has enacted more laws in order to adequate the regime on anti-money laundering and combatting the financing of terrorism to the new 40 Recommendations and achieve a better qualification for the “IV round of Mutual Evaluations”.

4.3 Has your country’s anti-money laundering regime been subject to evaluation by an outside organisation, such as the FATF, regional FATFs, Council of Europe (Moneyval) or IMF? If so, when was the last review?

Yes. The regime on anti-money laundering and combatting the financing of terrorism has been recently evaluated by GAFILAT. This evaluation process was carried out within the scope of the “IV round of Mutual Evaluations”, which began on September 29, 2017 and finished in December 2018. The assessment report has not been published yet.

4.4 Please provide information for how to obtain relevant anti-money laundering laws, regulations, administrative decrees and guidance from the Internet. Are the materials publicly available in English?

For information related to anti-money laundering requirements (including laws, regulations, administrative decrees and guidance) visit the following web page: https://www.sbs.gob.pe/prevencion-de-lavado-activos. The information is only in Spanish.

Should you have any question or doubt, please contact Vodanovic Legal contacto@vodanovic.pe.